In 2014, Thai Lion Air (TLM) plans to expand its network to Singapore, Guangzhou, Hong Kong, Shenzhen, Delhi, and Mumbai.

As a new carrier, (TLM) will compete primarily against Thailand’s 2 existing low cost carriers (LCC)s, Thai AirAsia (THA) and Thai Airways (TII)'s low-cost affiliate, Nok Air (NKA). Both are based at Don Mueang and serve Chiang Mai while AirAsia (ASW) is the market leader between Bangkok and Kuala Lumpur and also serves Bangkok to Jakarta.

Thai Lion Air (TLM) operated its maiden flight from Bangkok Don Mueang to the N Thai city of Chiang Mai on Wednesday, December 4. The route was operated using 1 of (TLM)'s 2 737-900ERs. The flight schedule for the 2x-daily service is as follows:
For those leaving Bangkok Don Mueang International Airport, depart 11:20hr and arrive Chiang Mai at 12:35 hr. The other daily flight departs Bangkok Don Mueang International Airport at 15:40 hr and arrives Chiang Mai at 16:55 hr.

For those leaving from Chiang Mai, depart 13:20 hr and arrive in Bangkok Don Mueang International Airport at 14:35 hr. The other daily flight departs Chiang Mai at 17:35 hr and arrives Bangkok Don Mueang International Airport at 18:50 hr.

Starting December 10th, Thai Lion Air (TLM) and Malindo Air (MXD) had an agreement so that passengers in Malaysia could book tickets to Thailand.

March 2014: Recent start-up Thai Lion Air (TLM) will offer a scheduled service from Hat Yai, Thailand, to local and international destinations - - SEE ATTACHED - - "TLM-2013-03-HAT YAI FLIGHTS." The first services, using an ATR 72-600 to Thai beach side destinations at Hua Hin and Surat Thani, will offer multi-flight schedules per week that connect to the airline’s main base at Bangkok’s Don Mueang International Airport.

The flights, starting March 21, will be supplemented in the coming weeks by international links to Medan, Indonesia, and Subang, Malaysia from the new Hat Yai hub. “Having ATRs allows us to operate to smaller cities and towns in Thailand and develop a more comprehensive domestic network,” (TLM) Managing Director Andi Burhan said.

Lion Air (MLI) said it is the 1st airline to choose Hat Yai as it is a “gateway into southern Thailand” and is well-known for popular holiday destinations.

The ATR 72-600, the 1st airplane of its type to be delivered to Thailand, will offer more ergonomic seats and restyled, larger overhead bins with 10% more volume for tourist and business baggage, Lion Air (MLI) said. “We will also be [using these new services] to encourage Thais to explore neighboring countries, namely Indonesia and Malaysia,” Burhan added.

October 2014: The continuing sluggish performance of Thailand’s commercial aviation industry has prompted a series of changes at Thai airlines, while the nation’s military government attempts to alter the image of a country that has lost the confidence of tourists owing to ongoing political unrest.

The latest move is a cancellation by Thai Airways International (TII) of its sole remaining Africa destination, Johannesburg. (TII) will cease its 3x-weekly flights to Johannesburg from January 2015.

The move comes as part of a call from new (TII) President Siwakiat Jayema for a -THB4 billion/-$126 million cost-cutting exercise. Siwakiat has also committed to cutting >-6,000 jobs at the flag carrier (TII) over the next 4 years.

Siwakiat is the 3rd President that (TII) has seen in a little >6 months. He took over from temporary President Chokchai Panyayong in July, who replaced previous incumbent Sorajak Kasemsuvan in January, following the latter’s resignation in December last year.

The poor performance of (TII) (it reported a net loss of -THB7.7 billion in the 2nd quarter) has been blamed on a general lack of confidence in Thailand as a tourist destination, plus endemic over-staffing at (TII).

Recent (IATA) Premium Traffic Monitor estimates point to a continuation of the downward trend in numbers, citing “significant falls in tourism and exports during recent months, when compared to a year ago.” As a result, (TII) is not the only local carrier seeing a management revolving door. Thai low-cost carrier (LCC) Nok Air (NKA) recently announced that Montree Jumrieng and Suraphon Israngura Na Ayuthya would replace two existing board members, and that former (TII) executive, Chokchai Panyayong would also join (NKA). Nok Air (NKA) announced it would boost its holding in long-haul joint venture (JV) NokScoot (formed with Singapore (LCC) Scoot (SCT)) with an injection of $7.3 million as of late October.

(NKA) said this would increase its holding to 47.5% of the new Thai long-haul company operating out of Don Mueang International Airport. However, the original launch of NokScoot planned to see Scoot (SCT) hold 49% and Nok Air (NKA) 51%; this points to a dilution of the original division with a 3rd company, Pueannammitr carrying a crucial voting balance of shares.

Figures from AirAsia (ASW) also indicate that although its Thai AirAsia (THA) increased capacity out of its Don Mueang Thai base to 3.61 million seats in the 2nd quarter, compared to 2.9 million the previous year (a +23% increase), its load factors dropped -4 points from 82% LF to 78% LF as demand slackened.

“(THA) has lowered its average load factor estimate,” Thai AirAsia (THA) Commercial Operations Director Santisuk Klongchaiya said. He added that as a result, (THA) will delay the delivery of three airplanes set for this year, in line with the recent statement by AirAsia (ASW) (CEO) Tony Fernandes that “expansion is necessary, but we will never stretch ourselves.”

January 2015: 737-9GPER (39832, HS-LTQ), Lion Air Group (MLI) leased.

June 2015: News Item A-1: Thai Lion Air (TLM) on June 19 extended its domestic network to include Ubon Ratchathani (UBP) in eastern Thailand.

See attached: "TLM-2015-06 - To Ubon Ratchathani (UPB).jpg."

The new 483 km route from (TLM)’s base at Bangkok Don Mueang (DMK) will operate with 3x-daily flights and be flown by its 737-900s. Direct competition on the route comes from Nok Air (NKA) (7x-daily flights) and Thai AirAsia (THA) (2x-daily flights). In addition, Ubon Ratchathani is also served from Bangkok Suvarnabhumi by Thai Smile (TSM) with 3x-daily flights. Thai Lion Air (TLM)’s network now comprises of eight domestic routes from Don Mueang, plus offering a direct service between Hat Yai and Udon Thani.

(TLM)’s current fleet comprises 13 737-900s, 5 of which have been delivered since the start of this year.

News Item A-2: Thai Lion Air ((IATA) Code: SL, based at Bangkok Don Mueang) (TLM) is planning to commence international operations this August with flights from its Bangkok Don Mueang hub to Singapore Changi. (TLM)'s Ground Handling Manager Nas Wongteerathaweeporn, told the "Bangkok Times" that flights to 2 Chinese cities, 1 of which is Taiyuan will follow later in the year, along with the launch of flights out of Chiang Rai, also to China.

In the long term, the Lion Airlines (MLI) subsidiary, is also planning to serve Japan albeit towards the end of next year Wongteerathaweeporn added.

Thai Lion Air (TLM) is continuing to expand its domestic operation, driving rapid growth in Thailand’s domestic market. (TLM) now serves nine of the top 10 domestic destinations in Thailand, having added +2 more in (2Q) 2015.

(TLM) has already overtaken Bangkok Airways (PGB) and Thai Airways (TII) to become Thailand’s third largest domestic carrier after Nok Air (NKA) and Thai AirAsia (THA). (NKA) and (THA) are still about double the size of Thai Lion (TLM) and are continuing to pursue domestic expansion. But (TLM) is expanding faster, narrowing the gap with its (LCC) rivals.

Thailand’s domestic market grew by about +20% in 2014 and is on pace to grow at an even faster rate in 2015. (LCC)s have generated almost all of the growth and now account for nearly 70% of domestic passenger traffic in Thailand.

Thai Lion AIR (TLM) launched operations in December 2013 with an initial fleet of 2 737-900ERs operating 1 domestic and 2 international routes. (TLM) currently operates a fleet of 13 737-900s on 9 domestic routes. (TLM) suspended international operations in early 2015.

After starting with only 1 domestic route, Chiang Mai in late 2013, (TLM) focused on domestic expansion in 2014. (TLM) added 5 domestic destinations in 2014 as it expanded its fleet from 2 to 8 737-900ERs. All of its 737s are in single-class configuration with 215Y seats.

(TLM) took delivery of another 5 737-900ERs in (1H) 2015, with most of the airplanes being placed into service in (2Q) 2015. (TLM) has used the additional airplane to launch 2 more destinations, Chiang Rai and Ubon Ratchathani, as well as add capacity on some of its existing routes.

(TLM) currently has 103,630 weekly seats, giving it about a 20% share of total domestic capacity in Thailand. The other two (LCC)s serving Thailand’s domestic market, Thai AirAsia (THA) and Nok Air (NKA), each have about a 40% share of Thailand’s domestic market. (NKA) and (THA) each carried 7.4 million domestic passengers in 2014 and about 2.3 million domestic passengers in (1Q) 2015. Both continue to pursue rapid expansion domestically.

(NKA) has more domestic flights and the largest domestic network as it operates ATR 72 and Dash 8-Q400 turboprops alongside 737-800s. (THA) also has >2x- as many destinations as (TLM), although it only operates A320s, which indicates there are still ample opportunities for (TLM) to further expand its domestic network.

(TLM)’s initial focus has been on trunk routes and providing sufficient frequencies to be competitive with (NKA) and (THA). With the exception of Phuket, where slot constraints have limited (TLM) to only 2x-daily flights, (TLM) has nearly as many seats and in a few cases more seats than its 2 main competitors.

For example, Chiang Rai and Ubon Ratchathani were both launched with 3x-daily flights. (NKA) and (THA) both operate 4x-daily flights to Chiang Rai, providing only slightly more seats than (TLM)’s 3x-daily frequencies with larger gauge airplanes. At Ubon Ratchathani, (THA) is smaller with only 2x-daily flights, but (NKA) currently has 7x-daily flights.

With the recent addition of Chiang Rai and Ubon Ratchathani Thai Lion now serves 9 of the top 10 destinations in Thailand, including Bangkok (based on current seat capacity).

The only exception is Samui, but the popular resort island is not served by any (LCC)s as the Samui Airport is owned by Bangkok Airways (PGB) (The Samui Airport runway also cannot handle A320s or 737-900ERs, which would preclude any operations from (ASW) or (TLM)).

As it has now established a meaningful presence on the main trunk routes (TLM) is expected to start competing soon with (NKA) and (THA) in some of the smaller domestic markets. (TLM) has stated it plans to begin serving Nakhon Si Thammarat in September 2015 and add Phitsanulok and Khon Kaen by the end of 2015.

(TLM) has not yet started selling flights on any of these potential new routes, but all would be logical additions to its network. Khon Kaen, Phitsanulok, and Nakhon Si Thammarat are the 11th, 12th and 13th largest market in Thailand, based on current seat capacity. They are only slightly smaller than (TLM)’s latest addition, Ubon Ratchathani.

All three planned new destinations are now served by Thailand’s two other domestic (LCC)s. (NKA) currently has 3 daily flights to Khon Kaen and Phitsanulok and 6x-daily flights to Nakhon Si Thammarat. (THA) currently has 4x-daily flights to Khon Kaen and Nakhon Si Thammarat and 2x-daily flights to Phitsanulok.

(TLM) will easily have the capacity to launch new domestic destinations in (2H) 2015, as well as continue to add frequencies on existing routes. (TLM) expects to end 2015 with a fleet of 20 737-900ERs, which would require 7 deliveries in (2H) 2015. (TLM) is also not yet fully utilizing all the additional airplanes it took in (2Q) 2015.

Some of the additional capacity will be allocated to the international market. In addition to Singapore, (TLM) is looking at launching services to China and Taiwan in (2H) 2015. But most of (TLM)'s expansion will likely again be in the domestic market, particularly given the regulatory obstacles now confronting all Thai carriers seeking to expand in North Asia in the aftermath of the Thai (DCA) failing an (ICAO) audit.

(TLM) initially delayed international expansion in 2014 due to the civil unrest in Bangkok, which impacted inbound visitor numbers. Tourism has since recovered but (TLM) now faces new regulatory obstacles from most North Asian countries. (TLM) also has an unknown international brand, making new international routes more challenging and riskier than domestic expansion.

Domestic demand has continued to grow steadily, making domestic expansion an attractive option. Domestic traffic in the Bangkok market increased by +19% in 2014 to 23.8 million passengers. The pace of growth has accelerated even further so far in 2015 with Airports of Thailand reporting a +27% surge in domestic passenger traffic at Bangkok’s two airports through the first 5 months of 2015 to 12.3 million.

(LCC)s have driven all the growth in the Thai domestic market over the last year and a half. Bangkok had +3.7 million more domestic passengers in 2014 than 2013 with (LCC)s carrying +4.2 million more passengers and (FSC)s carrying 500,000 fewer passengers. Through the first five months of 2015, Bangkok had +2.6 million more domestic passenger than the same period of 2014 with (LCC)s accounting for 2.4 million and (FSC)s accounting for the remaining 200,000.

The 6.6 million additional domestic passenger carried by (LCC)s over the first 17 months after (TLM) launched, have been roughly split equally between (TLM), (THA) and (NKA). But (TLM) is the main driver of the growth as its rapid expansion has led to faster expansion from the two established (LCC)s.

This is a remarkable figure, particularly as the combined domestic traffic for all the other domestic carriers serving the Bangkok market was roughly flat (at about 4 million, including 3.7 million at Suvarnabhumi Airport and 300,000 at Don Mueang. Suvarnabhumi is the hub for Thai Airways (TII), Thai Smile (TSM) and Bangkok Airways (PGB), while Don Mueang also has a small domestic operation from Thai Smile (TSM) and leisure carrier, Orient Thai (OTH)).

Thailand’s 3 domestic (LCC)s have been able to stimulate rapid growth and have not been relying on taking market share from (FSC)s. The stimulation, however, has come at the expense of yields (as would be expected from the huge increase in capacity).

Demand is robust as Thailand’s middle class population continues to expand, and Thais increasingly switch from buses and trains to budget carriers for domestic travel. But capacity has increased faster than demand, pressuring yields and profitability. Thailand’s domestic market will likely not be able to continue to support the very high growth rates it has seen over the last couple of years.

Thailand’s domestic market penetration rate also likely will not see further significant increases because it is already approaching 70%. (LCC)s accounted for 68% of domestic passengers in the Bangkok market in the 1st 5 months of 2015 compared to 61% in the 1st 5 months of 2014. Back in 2010, (LCC)s accounted for only about 35% of Bangkok’s domestic market (Data for the entire domestic market is not available but Bangkok accounts for roughly 95% of domestic capacity in Thailand.)

There will still be room for full service carriers offering domestic connections for long-haul passengers, particularly as all 3 domestic (LCC)s are based at Don Mueang, while Thai Airways (TII) and foreign full service carriers are at Suvarnabhumi, where there are currently no domestic (LCC) flights. (FSC)s also continue to provide the only link to Samui, one of Thailand’s most popular tourist destinations.

Bangkok Airways (PGB) is currently the largest full service carrier in Thailand’s domestic market with about 100,000 weekly seats including about 30,000 seats on the Bangkok - Samui route. While about 60% of Bangkok Airways (PGB)’s domestic capacity is on routes served by (LCC)s, its exposure is relatively limited as it has a fairly small presence in these markets, enabling it to focus on its niche feeding foreign carriers.

Thai Airways (TII) also has cut back its domestic operation in recent years, enabling it to focus more on connections to its long-haul network. (TII) is now the 5th largest domestic carrier in Thailand although Thai is still the 3rd largest domestic player (ahead of Bangkok Airways (PGB) and Thai Lion (TLM) (when also including flights operated by its full service regional subsidiary Thai Smile (TSM).

Bangkok Suvarnabhumi recorded a -1% drop in domestic traffic in the 1st 5 months of 2015 to 3.7 million passengers. While Bangkok Airways has continued to expand domestically (albeit relatively modestly) Thai Airways (TII) has continued to reduce capacity including by down-gauging some flights to Thai Smile (TSM).

Thai Smile (TSM) has taken over several domestic routes from Thai Airways (TII), but also now operates 3 domestic routes from Don Mueang which it launched in August 2014. Don Mueang overall recorded +44% domestic passenger growth in the 1st 5 months of 2015, driven by the +41% (LCC) growth and the new services from Thai Smile (TSM).

(LCC)s accounted for 96% of domestic passenger traffic at Don Mueang in the 1st 5 months of 2015 and currently accounts for about 95% of domestic capacity at the airport.

(NKA) currently has a leading 41% share of domestic (LCC) seat capacity at Don Mueang compared to 38% for Thai AirAsia (THA) and 21% for Thai Lion (TLM). When also including full service carriers, (NKA) has a 39% share of domestic capacity at Don Mueang followed by 36% for (THA), 20% for (TLM), 5% for (TSM) and <1% for Orient Thai (OTH).

Don Mueang currently accounts for 95% of total domestic (LCC) capacity in Thailand. Point to point routes bypassing Bangkok, account for only 2% of (TLM)’s capacity as (TLM) currently operates only one such route (Hat Yai - Udon Thani). (THA) currently allocates about 10% of its domestic capacity to point to point routes while (NKA) allocates only 1%.

There are opportunities for (LCC) growth on point to point routes. But Thailand’s (LCC)s are expected to continue focusing primarily on expanding at Don Mueang, including new links from Bangkok to secondary cities. Smaller regional carriers such as Kan Air are generally better placed for the thinner point to point markets.

Thai Lion (TLM) briefly operated in 2014 2 secondary domestic point to point routes using an ATR 72, but dropped the routes and returned its only turboprop to the Lion Group (MLI) after only about 6 months. (TLM)’s focus is clearly now on establishing itself as a major player across all domestic trunk routes.

The Lion Group (MLI) has been keen for (TLM) to pursue strategic domestic expansion, concerned that if it waits, it risks losing out to other carriers. (MLI) has therefore been allocating more deliveries to (TLM) than to its (LCC)s in Indonesia or Malaysia. In (1H) 2015 Indonesia’s Lion Air (MLI) and Malaysian affiliate Malindo Air (MXD) only took delivery of two 737s each, while Thai Lion (TLM) took 5 airplanes.

The focus on Thailand is poised to continue as +7 more 737s have been allocated for (TLM) in (2H) 2015. This is more airplanes than Thai AirAsia (THA) or Nok (NKA) are planning to add for the entire year.

(TLM) may not end 2015 with 20 airplanes, as there is always a lot of flexibility in the Lion Group (MLI) fleet plan. But (MLI)’s focus is clearly on Thailand and (at least for now) primarily the domestic market.

It is hard to predict when Thai Lion (TLM) or the overall Thai domestic market may reach a ceiling. The rapid growth recorded so far in 2015 by Thailand’s domestic (LCC)s will not be sustainable over the long term. But over the short term, the expansion seems set to continue as (TLM) has proven it is not afraid to battle longstanding (LCC)s Nok (NKA) and Thai AirAsia (THA).

August 2015: Thai Lion Air (TLM) has once more ventured into the international market with the launch on August 15 of daily flights between Bangkok Don Mueang (DMK) and Singapore (SIN) (see attached) "TLM-2015-08 - Bangkok to Singapore.jpg." The 1,442 km route will be operated by (TLM)’s 737-900s and faces direct competition from Thai AirAsia (THA) (6x-daily flights) and Scoot (SCT) (10x-weekly flights). Indirect competition comes from Jetstar Asia (PAH), Singapore Airlines (SIA), Thai Airways (TII), and Tigerair Singapore (TGR), who all operate multiple daily flights between Bangkok Suvarnabhumi and Singapore. There are now 211 weekly departures between the 2 major Asian cities. Thai Lion Air (TLM) previously operated a route to Jakarta, but this was dropped earlier this year, while a Kuala Lumpur service was operated for a few months between December 2013 and April 2014 before being handed over to sister airline Malindo Air (MXD).

(TLM) is the only Thai (LCC) to be granted (IOSA) registry status. Bangkok Airways (PGB) and flag carrier, Thai Airways International (TII) are the only full-service carriers to hold that level of certification in Thailand.

The new certification (which means (TLM) could eliminate audit redundancy, reduce costs and scheduled audit resource requirements (helps to raise the overall level of compliance across the Thai aviation industry). It also allows (IOSA) inspectors to undertake regular unspecified random audits over the next 2 years to ensure continuing compliance.

In June 2015, (ICAO) revised Thailand’s overall national rating downward to “red flag” status, citing “significant safety concerns” across both airline and infrastructure sectors nationwide. As a result, several (LCC) and charter operators’ flight schedules were frozen, or the airlines themselves canceled planned launches of new routes.

(TLM) has a 17-strong Boeing fleet, with 13 737-900ERs and 4 737-800s operating to 9 domestic destinations, plus a recently launched flight to Singapore. Following the (IOSA) rating, (TLM) plans to add more domestic and international destinations.

February 2017: Thai Lion Air (TLM) has added 2 new domestic routes to its network. On February 10, (TLM) the low cost carrier (LCC) began 2x-daily flights on the 719 km route between Bangkok Don Mueang (DMK) and Trang (TST). The route is already served by both Nok Air (NKA) and Thai AirAsia, both operating the route with 3x-weekly flights. On the same day (TLM) also began daily service on the 1,070 km sector between Chiang Mai (CNX) and Surat Thani (URT), a route already served daily by Thai AirAsia. Both route will be flown by (TLM)’s 737-800s.

March 2018: Thai Lion Air (TLM) took delivery of its 1st Boeing 737-9, setting the stage for the service entry of the 2nd variant of the 737 MAX. The delivery comes 10 months after the 1st 737 MAX variant, the 737 MAX 8, entered service with Malaysia’s Malindo Air (MXD), which, like (TLM), is a Lion Air Group carrier.

The (CFM) (Leap-1B)-powered 737 MAX 9 will be used by (TLM) to fly routes from Thailand to Bangladesh, China and India. The 737 MAX 9 has a maximum capacity of 220 passengers, +10 more passengers than the 737 MAX 8. It has a range of 3,550 nm, the same as the 737 MAX 8, although the 737 MAX 9 needs an auxiliary fuel tank to reach this range. The 737 MAX 9 gained (FAA) certification February 16.